The view that Western Australia, and therefore the rest of the country, is in decline doesn't square with the statistics that matter, writes Greg Jericho.

While the latest GDP figures to be released today will provide the national picture of the past 3 months, the annual state accounts released last week showed that 2012-13 was perhaps the turning point for the national economy as it moves to the next phase of the mining boom.

Six months ago, in the heat of the pre-election season, there was much palaver from politicians, and poor reporting in newspapers, which suggested Western Australia was in a recession. The talk came on the back of the release of the national accounts which showed that Western Australia had experienced two consecutive quarters of decline in State Final Demand (SFD). SFD only measures the level of demand for products and services in a state, but does not actually measure production - so it doesn't count production for things that are exported internationally or interstate.

For that you need to look at Gross State Product. The latest annual figures released last week showed that far from being in a recession, in 2012-13 the WA economy grew by 5.1 per cent - the largest growth of all the states:

Western Australia also remains the main driver of growth in our national economy. In 2012-13 Western Australia for the fourth time in the past 5 years contributed the most to Australia's GDP growth:

But this doesn't seem to square all that much with the "vibenomics" that WA is in decline and Australia is going with it. The reality, as with most things to do with Australia's economy, is that it's more complicated than just looking at the big picture. Looking closer reveals the economy changing from the mining investment boom, to the mining export boom, and a big change happened in 2012-13 - especially in WA.

One of the measures that most displays the change that is occurring in WA is state income. The picture it paints is vastly different from state product:

The difference is even starker when you compare state product and state income growth in per capita terms. Western Australia Gross State Product per capita grew by 1.5 per cent but its state income per capita fell by 5 per cent:

This is the biggest discrepancy between the growth in production and the income per capita in WA in over 20 years. To give a sense of how different this is, in 2010-11 when WA's per capita GSP grew by a similar 1.7 per cent, its state income increased by 18.2 per cent.

Indeed for most of the mining boom period, income grew faster than production.

Comparing the growth in both production and income in each state over the past 20 years demonstrates clearly that WA benefitted the most from the increase in the export prices of minerals. During the 1990s income and production in WA, as with all other states, grew at around the same pace. Then once the mining boom occurred, the boom in production was vastly outpaced by the boom in income.

When you recall that the price per tonne of iron ore went from US$12.68 in 2001 to US$179.26 in 2011, it's clear that any rise in the state income of a mining state was going to be due to the increase in the price of minerals rather than an increase in production.

But just as the increase helped WA the most, the drop hurt it the most as well. Iron ore now sits at around US$132 a tonne - or 26 per cent below the record price of April 2011. And with that decline in income came a fall in the growth of investment and thus employment.

It reflects what the Governor of the Reserve Bank noted in July when talking of the economy after the mining boom. He asserted that the rise in volume of exports to come in future years will cause the economy to grow by a "higher output per person". This will see productivity rise which is generally taken as a universal good. But one of the oft forgotten aspects of productivity growth is that it does not follow that increasing productivity means increasing employment. Governor Stevens noted of the export boom, "The level of employment needed to extract and ship the materials will be less than the level needed to build the capacity to do so." In essence, fewer people will be needed in the export boom than in the investment boom.

This is great if you own shares in a mining company, but not so great if you were hoping to be employed by one.

One of the areas which was hoped to take up some of the slack was housing construction. But the GSP figure shows that had not really occurred yet in the 2012-13 financial year:

In all but NSW and Victoria, private dwelling construction had a negative contribution on GSP growth. And even in NSW the 0.3 percentage point contribution was rather dwarfed by the 1.2 percentage point contribution of household consumption.

But 2012-13 might be the turning point of the changing economy. It is now 26 months since the RBA began dropping interest rates from 4.75 per cent to the current 2.5 per cent, and finally there are signs that there is a sustained improvement in the building sector. Building approval figures released on Monday showed a sustained increased in the number of dwellings approved for construction. The 19 per cent annual growth is the biggest since 2009-10 that occurred primarily off the back of the doubling of the first home buyer grants as part of the GFC stimulus measures.

In its interest rates decision yesterday, the RBA noted "recently there have been signs of increased demand for finance by households" and that "housing and equity markets have strengthened further over recent months, trends which should in time be supportive of investment". As our economy makes the change from the investment stage of the mining boom to the export stage, the government, the RBA and those looking for jobs outside the mining sector will hope the trend continues.

Comments (50)

wandererfromoz:

04 Dec 2013 8:10:59am

Thank you for this very informative educational article - too, too few from others referred to as 'journos'.

Does this mean then WA has a case for a greater cut of the GST as on the surface it seems to be being short changed? I look forward to the next article perhaps touching on this subject and the whole tricky mess of Federal/State finances particularly in the light of the Govt's tangled approach on Gonski - University funding - and States now because of the 'new', 'new' , whatever the hell it is arrangements. Thanks

burke:

Esteban:

04 Dec 2013 12:55:13pm

Royalties are a double edged sword because of the impact it has on GST.

This might not be exact to the cent but something like 90c of GST share is lost for every $1 of royalties.

Yet to earn those royalties, which come from production, a significant amount of money has to be spent on support infastructure ahead of the royalties coming on stream. Social infastructure to support the population growth is also required. Perth is projected to overtake Brisbane in 2040 and be Australia's third largest city. Lots of infastructure spending requires for the next 30 years and beyond.

The growth is due to mining. The extra need for infastructure is caused by mining. Mining delivers the royalties but the royalties massively erode the GST share.

Royalties are required for infastructure associated with mining and growth that other states do not have to pay for. GST is required to run the state just like every other state has to.

The GST carve up model only came in 12 years ago. It is still quite new. Look at the graphs in this article and tell me if it could be anticipated in 2001 that the WA economy would look like it does today.

WA would be better off if they shut down all mines and put pokies in the pubs.

The current GST model does not recognise the significant amount of money that it takes to fund growth and is a disincentive to perform well. Unfortunately it is also an incentive to perform poorly.

Todd:

04 Dec 2013 3:11:57pm

Because there are costs associated with expansion. There are pressures put on infrastructure due to population growth etc. That is why, all GST should be distributed based on contribution. However, under the current model we get around 50c/$ back. Whereas a State like Tassie gets roughly $1.50/$. The problem is, as with all socialist ideology, that by holding states like WA back (we can no longer afford the infrastructure etc as is evidenced by ratings agencies downgrading the State's credit rating) in favour of propping up "lame" States like Tassie, then we shrink the national pie for other taxes that do not have to be distributed back to the States eg Income Tax, Company Tax, Capital Gains Tax. By hobbling WA, the revenue from all other taxes falls. Therefore, if we gave back GST based on contribution, more GST would go back to the States that require it to sustain growth and thereby increasing the tax base for other federal taxes that could then be distributed to the "lame" states. I just hope the rust bucket states can re-emerge as engine rooms for growth because under the current GST model, WA and Queensland's growth will be very much subdued due to the limiting nature of a lack of infrastructure.

Isn't it curious that the so called top performing economies of WA and QLD are the two States to see reductions in their respective credit ratings. That is because the ratings agencies know that the benefits of success under the current GST regime are taken away, but the inherent costs of success/growth are left to that State to deal with. Tassie is in the best position in the country at the moment - and things will only get a LOT worse for WA and QLD. But Vic or NSW would be crazy to start doing better as that would mean higher costs, but less GST. The GST needs urgent reform as currently it is just going to be a crazy race to the bottom in order to get the bigger handouts from the GST pool. Socialism ALWAYS ends in misery for everyone. One would have thought we would have learnt by now, but we evidently have not. Don't worry about education standards of today, because they cannot be any lower than those educated around 40 years ago (the morons making the decisions today).

Stephen S:

04 Dec 2013 9:01:14am

In my view if WA's economy is going so strong it diminishes the argument for a greater share of GST. All talk of WA doing it tough and sponsoring the Eastern states especially Tasmania were smoke and mirrors and conveniently forgot the decades of subsidies given WA and QLD by NSW and Victoria when they had strong manufacturing sectors driving their economies.

Obviously people have forgotten that the prime reason for the mining tax failure was firstly the the ALP federal government foolishly tried to implement it in the first place then they compounded this error by giving offset credits for royalties paid to state governments. WA and QLD increased their royalties to ensure that the credits generated offset any tax liability payable to the Federal government.

A better way would have been for the Federal government to increase tax rates payable by mining companies and dare I say banks so as to take a bit more of their super cycle record profits whilst dropping tax rates for those industries struggling post 2008. Maybe even elimination of some of the overly generous tax deductions for capital expenditures might have been done.

Tax rates for businesses especially company tax need to be capable of being adjusted for cyclical changes. In my view this is better than giving business grants and hand outs. Business should not survive on welfare payments but should not be taxed into oblivion when in the middle of an economic down turn caused by others such as greedy banks.

I know a bit about the very generous tax concessions as I was a very senior tax auditor from 1977 to 2003 and worked previously as an accountant from 1973 to 1977.

Special deductions and grants are how politicians are able to deliver on promises made in exchange for favours given and the elimination of them would make it harder for them to have sweet heart deals with major supporters that disadvantage the nation as a whole.

wandererfromoz:

04 Dec 2013 11:44:17am

Thank you Stephen for your excellent and polite reply. I knew as well GST is not charged on exports but thought that if the price of iron ore fell from $170 plus per ton to $130 plus per ton then royalties would fall - hence the fall in real income for WA which is feeling the pinch (perhaps more to do with foolish commitments in the good times when prices were high) We all appreciate the bluff and bluster of the WA premier on this point.

You switched to issues re taxation rates for different sectors - and I do agree - subsidies are not the way to go as offset costing and pricing by multinationals and disincentives to drive productivity higher result from such measures. Variable company tax rates for a set period of time is a solution as the competitive pressures will remain. And of course it was drop dumb stupid to allow offsets for royalties against the mining tax - and that was another reason that incompetent government was removed.

But on track record to date is this government any better re competence and governance?

burke:

04 Dec 2013 11:49:01am

iI would prefer to see tax rates as fixed for very long terms. Mining companies need to do forward projections for many years, to justify investment. If governments then make a large hole in the companies' projected revenues, of course they will be upset. They will view Brazil, or Mongolia, or Africa as more attractive places to invest. A stable taxation regime is therefore essential.

Aquila:

04 Dec 2013 11:58:43am

Stephen, you say that WA "conveniently forgot the decades of subsidies given WA and QLD by NSW and Victoria when they had strong manufacturing sectors driving their economies' while conveniently forgetting yourself that those manufacturing sectors were propped up by extortionate tariffs that jacked up the prices of cars, clothes etc for all, including those in WA and Qld.

Even by the crude accounting you're using, the ledger was balanced some time ago, with WA having been a net sponsor of other states every year for the last three decades.

Esteban:

04 Dec 2013 1:38:49pm

Stephen S. As an accountant I am surprised that you don't know that growth requires funding. Doing well and growing requires more money than being stagnant or in decline.

The GST system has only been in since 2001. When did anything brought in by a Govt get the model correct from the outset? The growth that WA has experienced, and the attendant requiremnent for infastructure, could not have been anticipated in 2001.

The existing GST carve up does not provide enough infastructue monies to support the projected growth of WA. This is because the bulk of the royalties are lost in reduced GST.

Support from other states from time to time then supporting other states is how the GST carve up is supposed to work. All WA is asking for is that the carve up model recognises the greater need for infastructure spending to support the unique position WA is experiencing.

The main factor that is preventing a fairer GST system is that WA has 15 of the 150 HOR seats. It has very little to do with fairness.

Stephen S:

04 Dec 2013 9:08:37pm

Veganpuncher, I am adding a reply to your comments but some of my are for Esteban, Aquila, Burke and wanderfromoz as well as it save confusion of replying to each separately. My comments are short as there is limited time free to post comments and I do not want to bore people with a long drawn out article that would be cut about and edited to fit. So here it goes:-

1) It is early days but just look to senator Ian Macdonald's reported complaints about Tony Abbott's political staff being too controlling. Doesn't this remind you of Kevin Rudd's tight grip on government when he was PM? If so nothing has changed and they are still shuffling deck chairs on a sinking ship.

2) Yes of course you would like to see long term benefits for a speculative high risk industry. The shareholder should be funding their wealth making punt not the taxpayers.

3) The books were balanced years ago. Well have you considered the effect of inflation on the purchasing power of one pound vs $2 from Federation to now and therefore calculated it correctly?

4) GST was flawed from the time politicians got their hand on it. Vested interest groups prevailed and instead of a simple flat 5% tax won all sales of goods and services as I espoused to Paul Keating in 1978 over a bottle of Chivas Regal one cold winters night we got one full of forts such as why should a young struggling first home buyer pay GST on a new house costing $400,000 while someone can buy a house in Vauclause for $30 million and pay none? A flat GAST on all sales of assets, goods and services then get rid of Capital Gains Tax. A low fIncome Tax rate with no deductions. No capacity for forts. I am not surprised the mining sector does not like the sound of this.

5) There are other models but why do we have to cringe about our own capacities and always adopt what work in other countries?

Australia is in many ways a unique nation and why cannot we develop our own system independent of what other nations do? Yes we must be competitive and efficient but we do have to slavishly cave into the demands of vested interest groups.

Bean Counter:

04 Dec 2013 4:11:01pm

All of it's BS. The Federal ALP Govt borrowed about $400 Billion (including the not-in-budget NBN borrowings).This is the equivalent of about 25% of GDP.

Once injected into the Australian economy this should've increased GDP by AT LEAST 25% over the six years of borrowing. I say AT LEAST since the states and local govts also borrowed hundreds of billions which was then injected into the Australian economy...AND, with luck there should have been a multiplier effect as well.

Instead of the AT LEAST 25% increase in GDP, there has been a 14% increase ONLY. The nation has therefore been in nett recession (REAL recession) for about five years as the nett decline is AT LEAST 11%.

If anybody is wondering how we can "see" the hidden Nett Recession just look at unemployment rising continuously under Labor. despite the silly Greg Jerichos etc claiming the country is not in recession. Should anybody still not get it think "Great Depression" "Major Recessions" and what it is that makes them so nasty. UNEMPLOYMENT RISING? What; whoever woulda thunk it!

gbe:

The reality is as usual we gave it all away sure a few got wealthy but the majority of Australians are missing out most of the construction engineering and mining machinery are imported.

The states have royalties and the mining tax was a flop and a surprise is the large amount of overseas workers mining and construction companies in the north prefer to employ.

It's not easy for Australians to get work in the North and It would be true to say a major benedictory of the high wages is New Zealand with hundreds flying in and out daily and the town of Karratha affectionately named a suburb of Auckland.

Cap'n:

04 Dec 2013 11:02:59am

I can't imagine that it would be remotely accurate, but I'd love to see someone - are you listening, Mr Jericho? - have a go at working out the trade [im]balance between what is earned by shipping out raw materials (and how those earnings are distributed) and what Australia and Australians paid out in manufactured goods imported back in that a large part of those minerals went into.

dinohtar:

wandererfromoz:

04 Dec 2013 11:47:46am

Plus the zero capital gains tax on housing allowing so called 'family members' to reside in a home which in fact was only bought as a tax haven, a haven for safety in a stable country and has little to do with increasing the stock of houses for rentals - I think at one stage the figure on houses purchased and left 'vacant' by overseas buyers rose to 20% or so - the banks are the only winners in this stupid cycle of ever increasing prices without any added value. By the way folks that is called inflation.

Bruce:

04 Dec 2013 8:32:52am

I think we are living in the last stages of the ?economic? political model that has defined modernity.

For 200 years, modern states have appeared to prosper on the conversion of almost free resources into products and services on an industrial scale, once they allowed as many as possible to join the ?market? for these outputs ? by having ?jobs? in the stages of resource supply, conversion, and the distribution and application of the goods and services produced. Over that period, the number of economic players in modern states worldwide grew from about 5 million to perhaps a billion people now and the ?GDP? of modernity grew by about 500 times. This whole period saw the upstart, Political Economics, effectively swamp its progenitor, real economics. Scarcity, which real economics considers, was obliterated in the public imagination by the apparent easy availability of almost anything that money could buy, and ?growth? became the mantra of Political Economics and of the polities that sprang from it.

Now scarcity of supply (or of supply adequate to support the mad growth rates that Political Economics demands) is rapidly becoming real, as a result of our overfishing of almost every resource we fixed upon and of the real consequences of our conversion and uses of those resources on our physical, biological and psychological environments. We are also imperilled by the momentum we have built up in pre-commitments to modernity ? essentially, a further billion people have virtually been promised a life-like-this and are somewhere along the trajectory over no-man?s-land that the transition to modernity involves. And thirdly we are imperilled by our slavishness to the systems of modernity: not only do they not work remotely well enough to meet the challenges we face, and so must be a major handicap to our abilities to meet those challenges, but they consume vast amounts of the resources and the human potential that we might have available to minimise the prior risks, and to no good purpose.

These issues will inevitably drive a huge change from the ways of modernity. If Political Economics has anything to say about it, this change will be quite horrible for the un-rich, the un-powerful, and the newly un-essential. There are other, much better, ways for man to go.

We can sit about ? ?this calls for immediate discussion? ? lobbing insults back and forth about topics from the serial of minutiae that we call political and economic current affairs, which most contributors here seem to regard as a peak achievement. Or we can get on with ? even talk about together ? things that really do matter.

burke:

wandererfromoz:

04 Dec 2013 11:57:16am

Its paradoxical really and I am always reminded of the monkeys hand stuck in the jar of cookies - eventually the monkey dies. But in the scenario described we will all perish - China in its drive to so called 'modernity' builds phantom cities just to 'make sure growth continues' as they will not face the political reality should growth falter. Hence junk goods flood the markets with built in defects and obsolescence on a scale never seen before. Meanwhile the holes in the grounds become upside down mountains - others in the universe ponder man's stupidity - hence earth is known as the silent planet forbidden territory for fear of its madness spreading throughout the entire universe - better to keep it as the prison state that it really is. Remember the song 'we are all on the road to destruction - never were truer words sung echoing the prophecies that have been around since this so called civilization is believed to have existed.

Harquebus:

Lachlan:

04 Dec 2013 12:05:37pm

Hear! Hear!

As others have also written below, the fact that a few billionaires in WA are selling a lot of dirt does not make a success story. This is something that can't continue for long, and in the process, it is killing industry (such as manufacturing and agriculture) that can continue almost indefinitely, if done responsibly.

It is time we put a realistic price on the "almost free resources" that will essentially run out in a few generations.

SBG:

04 Dec 2013 12:49:12pm

Well said. I find it amazing that we collectively assume that perpetual growth is a given. Considering the physical limitations of the earth you would think that it may be worthy of humanity commencing a serious discussion of how we could prosper in a period of zero or negative growth.

burke:

notinventedhere:

04 Dec 2013 8:41:43am

WA has, since Federation, been the worst managed of the states. They have yet to have a moderately competent government which is not corrupt.

WA has been subsidised by the Eastern states for all but the last 5 years at best. As soon as the tide turns a bit, they are whining. The reality is that the WA government has not made the most of the boom for itself or it people. There are almost no rules on local content in mines. In short, mining in WA creates a relatively large volume of exports, at a very low income impact on the WA community.

There is no value added - we just sell iron oxide ore. That is the reason that mining per se will never be a way to build a prosperous and sustainable industrial base, unless the state government gets its hands dirty and intervenes.

Cap'n:

04 Dec 2013 11:06:30am

In fact it has a very HIGH income impact on the WA community: prices rise to reflect the astronomical wages of those few remote/FIFO workers who benefited at the height of the boom, leaving the vast majority of the population whose incomes have remained static to cope.

Aquila:

04 Dec 2013 12:10:20pm

notinvented here, it's rare to see so many consecutive sentences unsupported by actual facts.

Sticking to a couple of the most salient - WA has been a net sponsor of other states every year for decades. And Australia's industry that exports mining expertise and goods (as opposed to the products of production) was worth more than $80 billion last year. That has been built on the foundations created by the mining industry itself, and the spinoffs for contracting groups, services and research organisations, and local manufacturers.

Harquebus:

04 Dec 2013 9:06:53am

Wrong. Economics does not factor physics or the environment. If they were factored, things would not look so rosy.Economics is sucking the life out of our biosphere. I don't think that is a good outcome.

burke:

Rapideffect:

04 Dec 2013 2:56:29pm

The end of cheap energy is here and with it the end of economic growth. To grow an economy one needs to grow the amount of energy used. Since the earth is finite and has a limited amount of energy, growth cannot continue forever.

We don't need a strong economy (to pay) to look after the environment, we need a strong and healthy environment so the economy can exist.

Since nothing is or will change to transition away from a fossil fueled economic system, then this system will collapse. Has any country grown as it did before the GFC, which was in part caused by peak oil.........

Lachy:

04 Dec 2013 5:22:20pm

I've responded to you before on your inaccurate picture of economics Harquebus.

It is true that the biosphere is largely absent from the equation, but that isn't a failing of the economics discipline itself. A lot has been written on these topics, but attempts to internalise these 'externalities' into national economic accounting fail time and again because of vested interests (the last election is a poster child of one such reform - internalising carbon emissions through property rights). The economists themselves are under no illusion that the biosphere is a real system that we draw immense resources from. New schools of thought like ecological economics, thermoeconomics and econophysics are relatively young but have important contributions to understanding the role of energy in economic processes. A good example is the concept "uneconomic growth" which makes perfect intuitive sense to economists (and no doubt to you, me and anyone else who reads up on such things).

Whether our political and business establishment wants to adopt these additions is usually beyond the power of the economist though. Threaten the profits of major firms by internalising their social and environmental costs? They would rather lobby and fight against such changes. If you wish to contribute to possible solutions, then feel free, but just posting negative, critical stuff is unhelpful. So the present state of affairs doesn't work. Great. We hear ya. We heard you and your ilk the last 1000 times. Now, help us do something about it.

Harquebus:

04 Dec 2013 7:47:52pm

1: Forget economics. It is "fatally" flawed. It has polluted the planet, poisoned us all, does not factor physics or the environment and is what has got us into this mess in the first place.2: Implement national and encourage international population reduction strategies. One way or another, nature will drag us back to sustainable levels and it won't be pretty.3: Properly manage our finite resources which, are currently being pillaged.4: Reduce consumption using quotas and not with unfair taxation. We can not shop our way to sustainability.5: Plant lots and lots of trees. Massive scale reforestation will help the climate, rainfall and be a valuable renewable resource for future generations.

Here's the problem: Increase energy production, grow populations, grow the economy, build massive amounts of energy guzzling infrastructure and pay off debt. Ha!Watching our environment's rapid destruction while the growth deadheads happily go about their business is very distressing.

Billy Bob Hall:

NotMyName:

04 Dec 2013 3:33:58pm

The expected export boom should be a time for the States to demand more from the miners for the minerals they sell, we've only heard how it will affect jobs in the mining industry, and send customers' else where, but where is the proof; I don't expect the press to provide the answers they ran the miners rant to ensure we got their choice of federal government, and what a mistake they have turned out to be. As Bob Katter explained why Queensland is in debt, the miners' wanted the infrastructure so they could get the minerals to their customers', and is the reason for Queensland debt; along comes Newman claiming that Queensland debt has to be paid off and cuts everything; he agrees with Abbott not to tax the miners', no question of asking the miners for the money for the infrastructure that was built. Don't expect a building boom to benefit Australian families, the continuing criminal neglect of over two decades by all political parties by allowing the five billion a year taxpayer funded speculation of negative gearing to continue is excluding first home buyers from buying a home. Negative gearing has been the highest contributor of a catastrophic rise in the cost of living to affect Australians', that dwarfs the effects of the carbon tax, and even the hikes in electricity prices due to infrastructure upgrades; but all Abbott's ministers can echo on and on is carbon tax, boat refugees', Pyne lying and forced to back flip on education, and incompetence on foreign affairs, no honest and meaningful attempt to help Australian families. Come on Turnbull your time has come.

Paul Taylor:

04 Dec 2013 4:02:42pm

Mining profitability is a mix of production output, price obtained per tonne & reductions in the costs of production. Iron ore may now sit at around $132 a tonne...or 26 per cent below the record price of April 2011, but by what percentage has production output of the international miners BHP Billiton & Rio Tinto increased over the same period & what cost savings have been made? There was no mention of rising output & its quantum either by the mainstream media or the mining giants in discussions or advertising against the Resource Super Profits Tax (RSPT) or its watered down version the Minerals Resource Rent Tax (MRRT)!...paper book value downgrades on mining assets, to avoid paying higher taxes, can only be left low for so long in a recovering global economy.

If iron ore & coal are so important to the Australian economy why aren?t we bridging the gap in the so called two speed economy by producing the cheapest high grade quality slab steel in the world, for both local manufacture & export, by value adding iron ore, coking coal & natural gas 3 fold via the PRIVATELY funded EWLP $45B Project Iron Boomerang....encompasses economic, social & environmental benefits.

We would not need the Coalition Direct Action Plan which will use taxpayer money to pay polluters to stop polluting; rather in tandem with an ETS monies gained from utilizing substantial generated global carbon credits could be invested in large scale renewable energy projects & higher carbon abatement targets in Australia....a WIN WIN...a better economic outcome with global environmental advantages!

Why do we need to restrict our thinking to moving from an investment boom in iron ore & coal to an export boom in the same raw materials? Why can?t we avoid the repercussions of volatile commodity prices & ram home our comparative advantage by value adding & in the process generating substantially higher government tax revenue, even greater direct investment, regional development, higher employment & industry diversification in the process? Why can?t we vertically integrate our economy with our key natural resources to benefit the whole in the national interest?

Keith Lethbridge Snr:

Thanks for your article. Being an economic boof-head, I couldn't follow all of your points. However, there are several factors that lead me to be cautious:

Firstly, there are many people here in WA who are really struggling. Some are actually begging on the streets. This didn't used to occur.

Secondly, our State government appears to have racked up considerable debt. If I did that, people wouldn't say it was an indication of my future prosperity. They might say I was broke.

Thirdly, our population is rising beyond the ability of infrastructure & services to keep pace. Perhaps we could follow Sweden's example: Around 1950 Sweden's population was about the same as Australia's (7 or 8 million). Now Sweden has around 9 million while we have over 22 million. Our huge spaces only add to infrastructure difficulties & our lack of fertile soil & rivers handicap food production.

Yes, we have minerals to flog. Yes, we have houses to build for our ever-increasing population. Yes, we can import low priced goods from cheap labour countries. But do we have a long-term plan, or are growth & debt the only clear objectives?

Sorry about the lack of graphs, old fella. If you wouldn't mind, just try to imagine a spiral heading down towards a black pit. That's more or less what I have in mind. However, as mentioned, I'm just an economic boof-head.

paulm:

04 Dec 2013 9:54:52pm

The future of growth will not include the creation of jobs. The advances in technology will put paid to that idea. Profits will be made via speculative investments or the use of machines to do the many tasks required to produce income. Even those knowledge jobs will start to disappear. Self learning software will also put paid to that. What the future will require is increased taxes and govt driven job creation. Hence the idea that if you work one hour a week you will not be classed as unemployed will become the norm . With Australia's population expected to top 40 million by 2060 we could become a land of obese unemployed ghettos with gated suburbs to protect the most valuable of our society. Best of luck everyone!

Ruchie:

05 Dec 2013 1:07:26am

It seems that the rich get richer and the poor get poorer.Though it is unfair, it is the fact.The numbers and graphs don't make any sense, I think maybe they should focus on the truth cuz we all know that numbers are fraudulence.

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